Coal block cancellations will put us back by a Plan period

NTPC chief Arup Roy Choudhury explains impact of govt move and companys future plans.

The Rs 64,830 crore NTPC Ltd,the countrys largest power generator,is one of the biggest beneficiaries of the recent government decision to recast the losses of the countrys distribution sector utilities. In an interview with The Indian Express,the state-owned power majors Chairman and Managing Director Arup Roy Choudhury explains the impact of the move and the companys future plans. Excerpts:

How important is the recent Cabinet decision clearing a recast of distribution sector losses,both as a sentiment booster for the sector and in commercial terms for NTPC?

This (the decision to recast debt) is a springboard given by the Centre for states to take real corrective reforms in the distribution sector. Going beyond the positive impact for NTPC,the step,if implemented in the right earnest,could offer a booster for the economy as a whole… Its good for us (NTPC) as state electricity boards are our immediate customers and any measure that helps restore their financial viability will,in turn,help improve our position…

Does this partially mitigate the mess in power sector?

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The problems in the power sector are two pronged one being the distribution losses and the second on the coal supply side. So while the debt recast mitigates the distribution side problem,on the coal supply side though,the issues remain. There is absolutely no sign of anything drastic being done on the coal side. Its true that new FSAs (fuel supply agreements) are being signed (by Coal India Ltd),which is a sign that they plan to increase (coal) production. But the problem is that the power sector is growing at a much faster pace than the rate at which coal production is being ramped up.

Do you think the ongoing coal block deallocations would impact the power generation side?

Its certainly unfortunate,coming at a time when the fuel situation is already grim. If the whole process of allocations are to be repeated,it simply puts us back by a Plan period. Whatever progress was to happen on these blocks will now happen only in the Thirteenth Plan…

Does running power plants on imported coal make economic sense?

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There is no option but to be self reliant on our own resources. We have the coal reserves,and we know that. We should plan our (generation) capacity on the coal that we have… If we have transparent rules for handing out coal resources,and have a coal regulator to ensure reasonable returns for stakeholders,Im sure there will a number of serious players who would come into the sector.